Correlation Between Sealed Air and United Parks
Can any of the company-specific risk be diversified away by investing in both Sealed Air and United Parks at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sealed Air and United Parks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sealed Air and United Parks Resorts, you can compare the effects of market volatilities on Sealed Air and United Parks and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sealed Air with a short position of United Parks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and United Parks.
Diversification Opportunities for Sealed Air and United Parks
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sealed and United is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air and United Parks Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parks Resorts and Sealed Air is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sealed Air are associated (or correlated) with United Parks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parks Resorts has no effect on the direction of Sealed Air i.e., Sealed Air and United Parks go up and down completely randomly.
Pair Corralation between Sealed Air and United Parks
Considering the 90-day investment horizon Sealed Air is expected to under-perform the United Parks. But the stock apears to be less risky and, when comparing its historical volatility, Sealed Air is 1.32 times less risky than United Parks. The stock trades about -0.12 of its potential returns per unit of risk. The United Parks Resorts is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 5,543 in United Parks Resorts on December 27, 2024 and sell it today you would lose (750.00) from holding United Parks Resorts or give up 13.53% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Sealed Air vs. United Parks Resorts
Performance |
Timeline |
Sealed Air |
United Parks Resorts |
Sealed Air and United Parks Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sealed Air and United Parks
The main advantage of trading using opposite Sealed Air and United Parks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air position performs unexpectedly, United Parks can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in United Parks will offset losses from the drop in United Parks' long position.Sealed Air vs. Avery Dennison Corp | Sealed Air vs. International Paper | Sealed Air vs. Sonoco Products | Sealed Air vs. Packaging Corp of |
United Parks vs. Borr Drilling | United Parks vs. Awilco Drilling PLC | United Parks vs. Energold Drilling Corp | United Parks vs. Shelf Drilling |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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